Skyrocketing inflation, recession concerns, and supply chain issues have made every dollar a business spends more critical, leading many to try to optimize and innovate in every department.
One way that continues to be a cost-effective way to manage costs is outsourcing. A report from Clutch indicates that 83% of small businesses will maintain or increase their spending on outsourced services in 2023, with expense reduction as the most significant reason.
Outsourcing is also a great way to fill an internal skill gap or help drive business growth.
To reap the benefits of outsourcing, however, you need to decide on an outsourcing model. This article looks at one type of outsourcing model: dedicated outsourcing services.
What Are Dedicated Outsourcing Services?
“Dedicated outsourcing services” refers to a business model where a company hires an external team to handle specific business operations long term instead of separate independent contractors.
This strategy is also called a “dedicated team model,” and it is often used in outsourcing IT functions (especially software development), but it can also be used for a wide range of functions, including:
- Customer support
- Digital marketing
- Human resources
- Other non-core business functions
Unlike occasional or project-based outsourcing, the dedicated team model involves a more consistent partnership between you and the outsourcing provider.
In dedicated outsourcing, the third-party provider typically sets up a team of skilled professionals based on your requirements. This team becomes an extension of your in-house workforce. It works exclusively on your projects, often under your direct supervision and guidance.
You typically retain control over the team’s tasks, priorities, and project management (unless you have outsourced this function, too), while the outsourcing provider is responsible for administrative tasks such as recruitment, payroll, and providing a conducive working environment for the dedicated team.
What Are the Advantages of Using a Dedicated Team Model?
Many organizations find that the dedicated team approach adds incredible value to their processes. Here are some of the primary benefits:
The dedicated team structure ensures that the outsourced remote team is fully committed solely to your project. These professionals share the same business goals and work within your timeline, becoming as invested in the outcome as your internal team would be.
For example, imagine a startup hiring a dedicated team of developers to work on the back-end development of their new app. Unlike a single outsourced developer or a collection of contractors, the dedicated team works the same core hours, participates in all relevant meetings, and responds in real time to any issues or concerns.
Instead of a collection of individual outsourced talent that can have difficulty integrating, a dedicated team works closely together and collaborates with your in-house employees, striving toward the same objectives.
Their integration within your company structure promotes effective communication, alignment of priorities, and efficient project management procedures. They feel like part of the same team and are invested in your business outcomes.
A dedicated team provides a measure of stability to your long-term projects. Unlike freelance or temporary workers, these experts work on your objectives for the long term. This continuity in work arrangement ensures consistency in productivity and the quality of work.
This model is suitable for long-term projects that need continuous attention. A dedicated team ensures that the project will continue to be well-managed and run efficiently as it evolves.
With a dedicated team, there is a steady workflow and limited interruptions. Even as your in-house team may face turnover or internal restructuring, your outsourced team maintains progress, ensuring a continuous implementation of your strategies.
With regular updates and constant communication, a dedicated team model encourages transparency. This transparency allows the in-house team to maintain control over the project and understand the progress, challenges faced, and steps taken to mitigate those obstacles.
Dedicated remote teams generally offer flexibility in scaling up or down based on project requirements or business dynamics. This agile model allows you to swiftly adapt to market changes without the logistical challenges of hiring or laying off in-house staff.
What Roles Should Be Included in a Dedicated Team?
The roles within a dedicated team will largely depend on the project’s scope, the specialized skills the project requires, and the specific needs of your business. As an example, some key roles that are often included in a dedicated software development team are:
These are the people responsible for building and maintaining the client-facing and server-side of a website or application.
Front-end developers focus on enhancing user experience with visually appealing designs and seamless navigation. Back-end developers, on the other hand, ensure the website or application works smoothly by building and managing databases, servers, and applications.
UX (User experience) and UI (User interface) designers focus on making user interactions with software, apps, or websites as intuitive and enjoyable as possible. They decide how the product or service looks and feels, how users interact with it, and how it meets the customers’ needs.
The role of DevOps personnel is to facilitate faster and more reliable software delivery by promoting close collaboration between the development (Dev) and operations (Ops) teams. They automate processes, manage infrastructure, and ensure the software runs smoothly across different environments.
Quality assurance (QA) engineers are crucial for maintaining high-quality software. They are tasked with testing the product to ensure it is error-free and meets the required standards before release. Their work is integral in preventing bugs and enhancing overall product quality.
Business analysts help understand the business needs, identify possible improvements, and devise solutions. They are instrumental in bridging the gap between business objectives and technological capabilities. They play a vital role in requirements management and communication between stakeholders.
Project managers are responsible for planning, executing, and overseeing the project from start to finish. They coordinate between different team members, manage resources, and ensure that the project stays within the agreed timeline and budget.
They provide leadership, resolve issues, and drive the project toward successful completion.
What Are the Alternatives to the Dedicated Team Model?
While the dedicated team model offers numerous benefits, businesses may consider alternative outsourcing models depending on their needs. The Time and Material model (T&M) and the Fixed Price model (FP) are two common alternatives.
Time and material (T&M) model
This model is based on the actual time and resources utilized in a project. Businesses pay for the hours worked and materials used. The contract agreement typically includes rates per hour or unit of work.
The T&M model is like hiring a plumber. You don’t know how long fixing the leak will take or how complicated the problem is, but you know your desired outcome. So you pay them based on the time they spend and the parts they use.
Pros of T&M
- Flexibility: Unlike fixed-price contracts, the T&M model allows changes in the project scope at any stage. This flexibility is beneficial in projects where requirements are likely to evolve.
- Quality: There’s less pressure to rush the project to meet fixed deadlines, which can lead to a better-quality outcome.
Cons of T&M
- Uncertain costs: It’s challenging to estimate the exact costs in advance, which may lead to budget overruns.
- Requires active management: To prevent projects from dragging on, businesses must actively monitor progress, which can be time-consuming.
Fixed price (FP) model
In this model, the service provider agrees to complete a project within a fixed budget. The price, timeline, and project scope are agreed upon before work begins and require agreement from both parties to change.
FP model is like ordering a meal at a restaurant. You agree on the price upfront based on the menu and pay the same price, regardless of whether it took more effort or ingredients than expected for the chef to prepare your meal.
Pros of FP
- Predictability: Businesses can plan their budget accurately, as the cost won’t change unless the project scope is adjusted.
- Limited involvement: Since the project parameters are defined upfront, businesses don’t need to be heavily involved in the day-to-day management.
Cons of FP
- Less flexibility: Any changes to the project scope can result in additional costs and time, making this model less adaptable.
- Rushed results: To avoid going over budget, providers might rush the work, which can sometimes compromise the quality of the project.
Comparison with dedicated team model
Compared to the T&M and FP models, a dedicated team model offers businesses the advantage of having a team solely focused on their project, resulting in better commitment and integration.
This model offers more control over the project, continuity, and transparency, often leading to better results.
However, it might require more involvement from the business side compared to the FP model. In terms of cost predictability, the dedicated team model might not offer the same level as the FP model but provides flexibility similar to the T&M model.
The dedicated team model is a reliable basis for an outsourcing strategy, especially for projects like software development. It has the potential to save you money while giving you access to the specialized skills you need. By familiarizing yourself with this outsourcing model and its advantages, you can make informed choices to get the most out of the outsourcing partnerships you may be considering.
Embracing innovative ideas could be the key to unlocking new growth opportunities, and outsourcing is surely worth exploring—the possibilities might surprise you! To learn more about outsourcing and how to make outsourcing work for you, read our article on the top nearshore outsourcing locations for US businesses.